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Show Summary
In this conversation, Scott Choppin, founder of Urban Pacific, shares insights into the real estate development industry, focusing on his company’s unique approach to building workforce housing in California. He discusses the challenges of securing capital, the importance of strategic thinking, and the value of networking in business. Scott also highlights the significance of experimentation in real estate projects and the potential of Opportunity Zones for future growth.
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Investor Fuel Show Transcript:
Scott Choppin (00:00)
I think there was always the curiosity, but the, but the meaning behind what I was seeing that, that had to be built. what I always have been is I’ve always been like a good observer of the world. I’m a really great problem solver.But often the problem solving is just looking really closely at a thing,
I call it an experiment because it includes risk. It includes finding out what it is and discovering it with the possibility that this thing may fail.
Cause a failure is okay. In fact, it’s, it’s like part of the process
Q Edmonds (02:03)
Hello, everyone. Welcome to the Real Estate Pros podcast. I am your host, Q Edmonds. And you know what I’m going say, I’m excited to be here. I say this quite often, and today is no different. I have another fantastic guest. I mean, call me out on it. If you don’t find these guys are fantastic at the end, shoot me a chat. Shoot me email. Let me know, like, Quentin, you was lying. But you’re going to see that I’m not. And so I have another fantastic guest here.very strong at what he does, real estate development, also real estate and lottery. And so I’m excited for you to learn about what he, what he do does do. I’m always like, what is my connect, my proper grandma with that, but learn about his business. I can’t wait for him to tell you about it. Mr. Scott Choppin, Mr. Scott, how did I do with that last name?
Scott Choppin (02:53)
You did great. Yeah, perfect. Appreciate it.Q Edmonds (02:56)
Awesome. Awesome.I appreciate you being here, sir. Thank you so much. I don’t want to waste any time because I really, like I said, think this is going to be a very, good episode. So I want to dive in. I want you to tell people what your main focus is these days. Tell people maybe a little bit of an origin story, how you got started doing what you, you know, why you’re doing what you do and also what markets you’re operating in as well. so Mr. Scott, sir, you have the floor.
Scott Choppin (03:23)
I appreciate it. So primarily we’re operative in two sectors of the real estate development domain. Our first and really core focus is building new construction apartment communities throughout California. And we focused on and innovated a new type of housing we call urban townhouse or UTH for short. And that is a five bedroom, four bathroom apartment unit type of townhouse with a two car garage.And we’re focusing on growing the pipeline of projects in California and also endeavoring to build a platform around the Opportunity Zone capital ⁓ space. It’s a tax incentivized investment ⁓ methodology, capital methodology. And we’re putting that those two together to build a pipeline of workforce housing projects to fulfill and house families, middle income families throughout California.
And then the second part, which you mentioned earlier as we are and have been for the entire life of the company now 25 years this year, ⁓ provide projects services. So think real estate development advisory project services to third parties, think business owners, landowners, ⁓ people that need help with development projects and development expertise who aren’t necessarily focused on that space. ⁓ My origin story real quickly is based in Southern California. I basically have
and now third generation ⁓ in California. My kids are fourth generation in Long Beach and Southern California. And ⁓ basically come from a family background in real estate development.
Choosing to be a real estate developer isn’t exactly like on the career list at high school. When you go to career services or your advisor, there’s no books. So you want to be a real estate developer, that doesn’t really exist. So being around it and observing it, seeing it.
Um, but, um, you know, having a family background, it wasn’t necessarily, you know, like didn’t choose me or choose for me to have that career path. So I graduated high school, uh, worth construction. It was a, in the trades as an electrician for four or five years. Um, but through that basically figured out not that, right? Not construction. although I loved construction and actually I worked on new apartment buildings, my entire electrical career.
I didn’t want to be, you know, in the trades and it’s, and, you know, love the trades, no, no criticism of the trades. Uh, but that wasn’t my, where I thought I was going to be most effective, uh, went to school Cal Poly San Luis Obispo. And then basically came out of that with a, you know, intention of focus to be in the real estate development domain, uh, work for a couple of major development corporations here in Southern California, and then launched my company, urban Pacific in, uh, 2000, uh, March of 2000.
to focus on apartment development throughout the state of California. We’ve been focused on that now for 25 years. And then what was the last one? Remind me. ⁓ focus. I disclosed a little bit. really, California, good, bad, right? love California. I’m a native, born here, raised here, raising my family here, has a… ⁓
of things that we would say we could be doing better politically, tax, ⁓ regulatory, housing shortage. ⁓ But I think for me, the way I approach it is that us building workforce housing apartment communities is really a moat, like Warren Buffett style moat, meaning is there some expertise or capability or electoral property that that business has that’s protective of its business plan?
And while being a real estate developer, anybody can do that. Having the expertise to process projects, you know, like think politically and regulatory is, you know, like a high capability, high knowledge, um, you know, business, um, having an expertise to operate here in California. And so we sorta, we run the gauntlet of getting projects approved in the state of California. And here’s the moat is when we’re done going through the gauntlet of getting the project ready to build and building it.
it’s in very high demand and it’s very valuable when we’re done with it. And so, that’s, know, sort of our like focused story around California. We’ve worked in several other States and, I would work in those places in a heartbeat. love Texas. ⁓ I love Arizona. You know, we’ve worked in Oregon up in Seattle. So really almost all the Western States, Colorado included. ⁓ but California is, know, it’s, you know, huge economy. don’t know, fourth or fifth in the, in the world, ⁓ size wise.
population density, ⁓ LA County has larger populations than almost all the countries in the world, right here in our backyard. So for us, it has a bunch of characteristics that make it very ripe opportunity.
Q Edmonds (09:08)
Scott, thank you, man. Thank you for the way you answered those questions. I love stories, man. So I thrive on stories, storytelling, listening to people tell their stories. And so I thank you for telling this story. I thank you for painting the picture. I thank you for telling us about third generation in real estate. Your kid is going to be fourth generation. I appreciate the fact that I believe I heard you say you kind of wasn’t forced into it.Like they didn’t force it on you, but it was still in you, right? It was still kind of, I call it epigenetics, right? It was like in your bloodstream, you know what I’m saying?
Scott Choppin (09:48)
It is. fact, I’ll tell you story. So I didn’t choose it. I went to work electrical, didn’t choose college. I made all those, you know, I would say not poor choices, but you know, at the time, you know, choices that I probably would do differently today.But a couple of things happen. One is ⁓ being around the job sites, working electrical work, right? Like you’re in wood frame buildings. And I always knew when the developer of the project showed up, wasn’t our project. was, I was just working there, but you know, we’re driving a nice car, wearing nice clothes.
You know, moving around the project, like, you know, the boss, right. And I like, I, what I knew was I knew what that meant. I knew he’s the developer. He’s the lead dude. He’s the chief or whatever you want to call it. So that was one part of it. And I, that was attractive to me. You know, I was, you know, I was a dirty construction guy and I was fine with it. Like I love doing it. ⁓ but I was like that, like, like that looks attractive. And I knew what that was. And then the other part of it was in that same time period.
I was, I love to read and I read a lot and I read, picked up like several real estate books. And one of them was this really fifties era crazy book. was, how to make a million dollars working in real estate on the weekends. was one of those books, right? Really cheesy fifties book, you know, probably just throw away when it was written. But what it taught me was, you know, buy low, sell high, right? Buy a property, add value and sell it for more.
Right. You know, rent, you know, buy the apartment building, fix up the units, you know, rerent them, hire rent and sell it, ⁓ for land development, for development. It’s, buy an empty property and build a building on it and rent it and sell it for more value. So that as, as, know, simple as it was, ⁓ taught me this is what deal making is. And this is how developers make money, which I, you know, didn’t not that I didn’t learn it. My family.
But, you know, I was like one of those lessons you certainly pick up on your own. So that was, that’s always a fun story to tell.
Q Edmonds (12:21)
Yeah, and I appreciate again love stories and I thank you for it. I quite often say destiny has no wasted moments. And when I say that, I mean, when you’re on a destination somewhere, you pick up tools, habits, they come become transferable. And so I love the way how you broke it down and say your self awareness. Listen, I’m watching this guy, nice card, nice dress, looking at myself like, maybe, you know, I want to do that. Yeah, where do you thinkDo you think that self-awareness has been there for you since you was younger? Like, you always had that curious or kind of, I guess I’m saying curious or analytical to look at something and say, hey, know, that’s serving them well, maybe that can happen for me. Do you think that kind of curiosity has been in you and have served you kind of as you continue to build your success?
Scott Choppin (13:12)
I think there was always the curiosity, but the, but the meaning behind what I was seeing that, that had to be built. Got you. That book built background for me to then when I would, you know, I, I, what I always have been is curious, you know, hence the reading, but I’ve always been like a good observer of the world. Like this is like, I’m a really great problem solver. This is what I say about myself.But often the problem solving is just looking really closely at a thing, right? Like, you know, at my house, this happens all the time. Something breaks, right? And I’m like the fix it dude. I don’t know what it like, you know, I’m fixing some electronic thing. I don’t know. It’s making this up, but I will look at it and you sort of tweak it and push it around and see how it works. And you owe this one thing’s not working. And I don’t know, Jack, about this thing, but I can sort of see that the system, at least as I can observe, it doesn’t seem to be working. We know it’s not working, but then you look at the
specific thing that’s not working. know, you don’t always are able to tell, but that skill and that curiosity to sort of poke in. I, in fact, I have my distinction for it is experimentation. And I use that technology because it includes risking something. I’m going to, I’m going to endeavor to do this thing or find this thing out. And I’m going to go through sort of a process of it. And I’m not like a scientific experimenting kind of guy, but that
by walking around in the, you know, the machine that’s broken, that’s experimenting. Right. And I contrast that to, I come across people all the time that either are not able to, or not interested, or not have the curiosity to sort of like poke around at things. Like, you know, people, like one of the ones I always see is, you people are like, hey, show me how to use the software, right? I need to use this piece of software. And I go, I don’t know how to use it.
And they go, well, me neither. And I go, okay, we’ll just go poke around in it. mean, it’s like literally those are the words I use. And I often observe people are uncomfortable with that. And I don’t, it’s not a, it’s not a criticism, but they’re just like, but I, yeah, I’m in there sort of clicking around. It can be dangerous. There’s risks. So I call it an experiment because it includes risk. It includes finding out what it is and discovering it with the possibility that this thing may fail. And what the key is why experiments nice.
Cause a failure is okay. In fact, it’s, it’s like part of the process
and that’s what experiments are. that didn’t work. Let’s do another iteration of, that didn’t work. That didn’t work. that worked. You know, let’s do another one. And so I apply that to our real estate projects. Like I think of all of our real estate projects as experiments, right? Cause they risk loss. we have to discover new things and sometimes we know them well, not all projects are the same level of experimentation. Some are low level.
Hey, we know this well and we’re just going to maybe a new location, a new city, a new state or something that’s differentiated, but we know generally the process of it. Sometimes it’s totally, you know, we talked earlier in our prep, we build five bedroom apartment townhouse units with two car garages. No one’s done five bedroom units at scale. So that was a grand experiment. And so we, did things to make those experiments lower risk to mitigate. but you know, that ability to poke around and
take risk and experiment and to discover the thing to fix it, which includes also discovering market gaps that you can exploit to make money and take care of your family. So I would say that would be a primary skill of mine.
Q Edmonds (17:23)
Yeah, thank you. mean, you know, brilliant explanation of like when I say destiny has no wasted moments, like I can see me what clearly see the way you’re wired, your analytical side, the curious side, why it served you so well within your business. it’s it makes total sense why you have a development side like you like you scratching all your itches. You got the development side. You got the advisory side. Like we’re going pick things apart in so many different ways. And I clearly see it.And I’m glad I love exploring those kinds of avenues of business, right? Because a business person, they are who they are for a reason. And when you really dissect yourself and be self-aware of yourself, you’ll really see, and I know it may sound cliche, but see where your superpower is really being used right where you are. And we don’t have to compare ourselves to nobody else. Let’s just be self-aware enough to know who we are and use the superpower that we have.
to build successful businesses, to serve people, to figure out problems. And so, yeah, so I can’t say it as eloquently as you, but I thank you. I think that’s beautiful. So Mr. Scott, let me ask you, what’s the next real goal for you, sir? What’s the next real goal for your business?
Scott Choppin (18:36)
Yeah, I sort of alluded to earlier, but we’re really super enthusiastic about the opportunity zone capital and investment program. And that basically is a tax incentivized ⁓ investment vehicle that basically will be focused on sort of lower and middle income communities throughout the United States and certain census tracks, certain geographic areas. And we want to go build our five bedroom apartment projects.in those zones and use that capital for two purposes. ⁓ One is that the capital, its tax incentive is that if you invest and build and hold that apartment community for 10 or more years, then you have no tax on the gains of the value of the apartment project. As well, you can take all the depreciation as you would normally in any newly built asset. And if you hold it past 10 years, there’s no depreciation recapture.
And so the tax incentives are huge. So I’m enthusiastic about that. But what I’m more enthusiastic about is that because that tax incentive is based on that 10 year timeline, it means that the capital we raise in the institutional and high net worth capital world is that those investors will be oriented around holding for 10 plus years also, which for us as apartment developers that use outside capital, as most developers do, that means we can own these for the long run. And that’s what I’m really
ambitious about. So we want to build this workforce housing, these five bedroom units, and combine them with a capital that will allow us to hold virtually forever. That’s how I think of it in my head, or at least 10 plus years, which is almost forever in the capital world. ⁓ We want to just build a ton of those, serve families in California, in these low and middle communities. Us and our investors will get the tax benefits.
but we’ll get to hold these and be stewards of these, you know, workforce housing, you know, for virtually forever.
Q Edmonds (20:35)
You using some words that makes me, my antennas go up when I hear them like serve. And then you said, ⁓ steward. When I hear those words, it makes me smile because it really makes me, to me, I like an anchor. There’s really, there’s a anchor in you that wants to serve and wants to store it. And those words don’t.They come from a unique place. so when I hear that, it kind of makes me tingle because I’m like, I’m talking to someone who really know the benefit of helping people, right? People are always say people are the real currency. And when you build a business around serving people, servitude, that’s a sustainable business that’s going to be around for a long time because the foundation is about servitude. And so service is always obviously
providing the need, but also it’s service, right? You know, that’s the heart of it all. And so when I hear those words, man, that, that, that really, gets me, it gets me to perk up. And so because you got that mindset, I want to talk to you about relationships. I’m going to hear your perspective on building relationships, have building relationships helped you in business as it, ⁓ was it a positive help, negative help? Like, I just want to give.
your advantage in perspective on relationship.
Scott Choppin (22:03)
No, I’m right with you. ⁓ So earlier in the prep call, we talked about that learning group I’m in, Aji Advantage and the folks that work in that. And really the fundamental characteristic of the knowledge that’s conveyed in there is help. Being an offer of help to people you do business with and any human being. You said it earlier, right? Human beings. In fact, the founder of that, Hecht, he calls business human business.Q Edmonds (22:32)
Are you serious?Scott Choppin (22:34)
Yeah. Because basically, I if you said it earlier, like, you know, we’re not transacting with machines. I mean, you know, we can argue about AI and where that’s going to show up and we’ll, you we all have to pay attention to that. But fundamentally we’re doing business with other human beings and we’re helping them with whatever we do to help them our offer. And then we ask for their help and return, right? Often, you know, in business, that’s a transaction and I don’t mean transactional.I mean, like true help where, I’m going to give you this great help to build this apartment building and you’re going to pay me to buy the apartment building. so my help is building and organizing the building and getting it leased up. Your help is to buy it for me at the end of the thing. And, know, that’s the trade. I help you get an apartment building. You help me get money, right? Or profit. call it. Yeah. ⁓ look, the reality is networks of people, of human beings is the most important thing that we have.
in all of this. mean, none of it would be, none of us would be capable of doing this stuff without other people that we know in business and that we transact with that work with us on teams, our families, our loved ones, right? Those are all different kinds of networks, know, our marriages and network, right? You know, our spouses and families that’s associated with that. And so, you know, a big part of what I’ve learned in this, in this group, the Aji Advantage,
is how to build those networks powerfully, right? And do it in different ways. One key component of it is to build those relationships early before you need them, right? On most of us, most human beings are reactive or we have reactive characteristics, which means that, I need this thing. I’m going to go find the people that help me do it. A couple of things to add also, ⁓ there’s a book and I think I’m going to get the title right. It’s who, not what.
And it’s basically all about this that, know, like, like here’s the example I would use for this book. All of us do this. Hey, I need to go fix this thing. Whatever it is, or I need to do this thing. I’m going to go figure out how to do it. I’m going to go on YouTube. I’m going to read books. I’m going to get guides. I’m going to PDFs. I’m going learn how to do this. So that’s one way to do it. And that’s learning how to do the what. But the other way to do it and really the stronger way to do it is let me find somebody who knows how to do that.
And importantly, way better than I could ever be at it because they’ve been doing that thing for 40 years or 20 years. And there’s all that knowledge that they’ve built. get access to that. And so that’s the who. Right. So, you know, don’t learn how to do it yourself. And I’ve been very literal and basic here. Don’t learn how to do it yourself. Find the person who’s expert at it and pay them. And that’s a form of building networks, by the way.
of finding people that are great help and return for what you need. And by the way, the help is nested, right? So like I got my client here, I’m here, and then I got architects and civil engineers and other vendors. I got relationships with cities. I got relationships with capital sources, all those nest together in networks of help that all serve each other, right? There’s all these transacting and help going back and forth to all those different component parts, right?
client pays us, we pay the civil engineer, he pays his employees, the employees, you know, help their families, right? That layering and nesting is like infinite, right? Virtually. Yeah. So I think I’ll stop there and, you know, check in with you on, on it, but I can’t think of anything more powerful. And then I’ll leave you with this, that this is came from Toby Hecker, founder of Aji. He said, people pay you for your networks. If you work.
And you have all this great help and powerful teams and powerful vendors. People want to transact with you because you, they know that you can deliver whatever you deliver in a great and powerful and profitable and effective way by all those people that you know. Right. And so they’ll pay, you know, people don’t think of it that way, but that’s ultimately what they’re doing. Hey, I need this thing done. I need the best team. need the best, you know, like leaders in those teams.
that group comes together to deliver that product and people will pay a lot of
Q Edmonds (26:53)
Well, listen, I don’t want to talk over Toby, ⁓ that, that great, great quote, people pay you for your network. think that’s exceptional. ⁓ and I never quite thought about it like that, but I think that’s brilliant. And so I’m glad you said that, that I wrote that down. That was going to be sticking with me because that, that causes me to even examine my network. Right. And so, yeah, I’m because I, because I mean,When you said, my mind goes so many different places and I think just think that’s wonderful.
Scott Choppin (27:25)
everywhere when you think about it. There’s no place that doesn’t show up. ⁓Q Edmonds (27:32)
Oh,it’s so much I want to say. Oh, yeah. It’s so good. Oh, it’s so good. Yeah, yeah, yeah. Listen, Chyma has been greatly well spent. I thank you so much. think this was absolutely phenomenal. If someone wanted to reach out to you, connect with you, collaborate with you, learn more about what you’re doing, how can they get in contact with you?
Scott Choppin (27:54)
Scott. Yeah, I would encourage people to go to our website. It’s a triple w urban Pacific.com. So w w w urban, like the city Pacific, like the ocean.com. And then, you know, we have, ⁓ outreach, you know, portals that people want to message us through the website. my, ⁓ social media links are also, ⁓ on the about page. I’m on Twitter acts, predominantly in the real estate space there. And then I’m a little bit on LinkedIn.But if people want to reach out through the website, that’s the best way to get a hold of us.
Q Edmonds (28:27)
Beautiful. So I say this sincerely. Thank you for your time because time is definitely valuable. Sometimes you can leverage money for your time. People can be paying you for your time just to show up. That’s a whole business in itself. So I say thank you, honestly. Thank you for your time. Definitely thank you for your stories. I love when people…They know the power of their narrative. They know the power of their word, their story, and so their journey. So I definitely thank you for your story. And thank you for your perspective. Thank you for the way you think. know, have given us some really, really good perspective today. I think enough to even shift some people’s mindsets, and with those nuggets, I really believe it could shift their mindset a little bit today. And so I know my mindset has been shifted, if I’m being honest with you.
Mr. Scott, really appreciate you being here today,
Scott Choppin (29:26)
Yeah, so good to be with you.Q Edmonds (29:27)
Absolutely. So to the audience, listen, you can’t tell me you didn’t get the value. You can’t tell me you didn’t enjoy the show. I told you by the time we get to the end, call me out. If I didn’t say it was going to be a fantastic show, if I didn’t deliver, call me out. But not even just me. It’s just the people. It’s the way things work. It’s the humility of it all. It’s the networking, right? It’s the networking of it all. I can’t do this show by myself. Y’all just want to hear me talk. Mr. Scott has given you tremendous value.And so please make sure you’re subscribed because I promise you they’re going to continue to bring up fantastic people just like Mr. Choppin. So sir, I thank you and everyone else. We will see you on the next time.
